Arranging for a home loan have several variables, just like picking the style of property you want to live in. Finding the best lender, comparing mortgage interest rates, and putting down sufficient down payments are just a couple of minor considerations that must be considered. Here are a few things to think about before applying for a loan in Essendon.
Conduct Proper Research
Acquiring a mortgage is going to be one of the most important decisions that one will ever make. Prior to making any major commitment, it is critical to conduct a comprehensive research. While calculating the cost for your dream house can be simple, it’s all too easy to overlook the hidden costs that can quickly drain your deposit. Stamp Duty, LMI, transfer fees, as well as conveyance and lawyer service charges are some of the additional charges to consider depending on whether this is your very first or second house. Do your research and consult with relatives and friends who have gone through the home loan procedure to avoid any unpleasant consequences down the track.
Check Mortgage Rates
Understanding mortgage rates as well as how they will affect your mortgage must be part of your homework whenever you apply for a loan. Fixed-rate mortgages and variable-rate mortgages are the two primary types of mortgages available.
A fixed-rate mortgage is exactly what the name suggests; the interest rate is set for the duration of the loan. If you want consistency and want to understand specifically how much you need to spend each month, this is a simpler alternative.
Make Sure Of Your Job Stability
While employment changes are wonderful when they happen, doing so shortly before applying for a home loan is not really a good idea. Lenders always want confirmation that you can keep a steady work with a constant income in order to make regular payments, in addition to your credit rating and savings. A six-month rule’ applies in this scenario as well, similar to your savings proof. Lenders would still place special emphasis on your new employment if it’s within the same business, particularly if it’s a raise. If you’re making a total job move or going self-employed, make plans as much as possible and consider delaying your application by six to twelve months.
Maintain A Good Credit Score As Well As Savings
When you are applying for a loan, the first thing a lender would check is your credit rating and savings. This demonstrates to the lender your dependability and ‘creditworthiness.’ Prepare to be turned down by lenders if you really do not have significant savings set aside ahead of time. Most lenders seek evidence of regular saving and prudent purchasing habits over a 6-month period. Not only will having a healthy savings account benefit you, but a good credit score will also reveal your borrowing history, payment abilities, and spending patterns.
Decide The Amount Of Down Payment
The amount of savings you have will impact how much deposit you can make. You’ll have greater negotiating leverage with your lender if you put down a larger deposit. A smaller deposit, on the other hand, may result in additional taxes. While a deposit of 5-10% is common for first-time homebuyers, anything less than 20% will result in a penalty for Lenders Mortgage Insurance (LMI).
